TLDR: U.S. startups are in need of further economic relief to support their business operations amid the coronavirus pandemic. In a recent survey conducted by Engine, a majority of respondents who received federal assistance said the financial support they obtained was insufficient, and entrepreneurs voiced support for a variety of more-targeted policy proposals—such as equity investments, forgivable loans, a startup fund, tax credits, and grants—that could help provide them with the assistance they need during this difficult time.
Startup News Digest 10/09/20
The Big Story: House antitrust report suggests sweeping changes to tech landscape. After spending the past 16 months investigating allegations of anti-competitive practices by Amazon, Apple, Facebook, and Google, the House Judiciary Committee’s Democratic leadership this week released a 449 page report proposing that lawmakers overhaul existing U.S. antitrust laws, including limiting large tech firms’ ability to acquire startups. While policymakers proposed taking a variety of steps to address claims of market dominance and abuse—such as breaking up the largest firms and providing more regulatory authority and resources to federal agencies overseeing the tech industry—lawmakers must remain vigilant that their overall recommendations do not harm competition by hindering startup growth and innovation.
Startup News Digest 09/18/20
The Big Story: Acquisitions, content moderation become focus of antitrust hearing. A Senate antitrust panel held a hearing this week to examine the impact of Google’s online advertising market on competition, but in what is becoming a routine occurrence, policymakers shifted their focus to other areas, spending considerable time airing unrelated and unsupported claims about Google’s supposed anti-conservative bias and the alleged harms of acquisitions.
Struggling U.S. Startups Still Waiting for Viable Relief Package
TLDR: Congress is back in session following the August recess, and Senate Republicans plan to vote as soon as tomorrow on a “skinny” coronavirus relief package. It is widely recognized, however, that the legislation is unlikely to advance through the House. That’s why it’s important for lawmakers from both sides of the aisle to work together to craft a legislative package that strengthens small business loan programs and provides long-term support for the nation’s startup community.
Startup News Digest 08/28/20
The Big Story: SEC’s accredited investor update a good first step for startups. The U.S. Securities and Exchange Commission this week updated its “accredited investor” rules—which govern who can invest in early-stage, privately held firms—to allow individuals who do not meet the existing wealth threshold to participate in private capital markets. The previous rules only allowed individuals who earned more than $200,000 per year, or had a net worth of over $1 million, to qualify as accredited investors. The updated rule expands the definition so that potential investors are not judged only by their wealth, but by other features—such as having relevant knowledge and expertise—that can make it easier for qualified individuals to invest in startups.
Negotiations on Relief Package Must Include Startup Voice
TLDR: Policymakers and Trump administration officials are holding discussions this week about the impending coronavirus relief package, but the lack of progress on a deal means that Americans and entrepreneurs are still waiting for much-needed support. As deliberations continue, lawmakers should consider a variety of proposals to strengthen currently available small business loan programs and pursue policies that will position startups and entrepreneurs to survive for the long-term.
Startup News Digest 07/31/20
The Big Story: Messy ‘Big Tech’ hearing fails to address startup competition. Big tech CEOs were in the hot seat this week during a House antitrust hearing ostensibly about anti-competitive practices. Instead, however, lawmakers used the opportunity to air a variety of grievances against large tech firms without offering a coherent plan for policymaking that could benefit the U.S. startup ecosystem. While some of the members of the House Judiciary Antitrust Subcommittee used Wednesday’s hearing with the CEOs of Amazon, Apple, Google, and Facebook to address startup concerns, the hearing clearly demonstrated that policymakers need to rethink their approach to competition policy by listening to the concerns of the entrepreneurial community if they truly want to support startup growth and innovation.
Startup News Digest 07/24/20
The Big Story: In order to promote tech competition, Congress needs to hear from startups. While a planned House antitrust panel next week featuring the CEOs of Amazon, Apple, Google, and Facebook has reportedly been postponed, the startup community is still paying close attention to ongoing congressional discussions about allegations of anti-competitive practices by the country’s largest tech firms. Recent history has shown that efforts to combat the perceived dominance of a few tech firms often have counterproductive outcomes, and policymakers need to factor the U.S. startup community into their work moving forward.
Next Coronavirus Relief Package Should Address Startup Concerns
TLDR: When Congress returns from recess later this month, policymakers must ensure that they are effectively supporting startups in their fourth coronavirus relief package. In order to protect our nation’s startup ecosystem, however, Congress needs to look beyond currently available small business loan programs and examine other policy proposals that will enable startups and entrepreneurs to survive the pandemic’s economic fallout.
Startup News Digest 07/02/20
The Big Story: Congress extends small business loan program, but startups still need relief. Congress this week extended the deadline for startups and small businesses to apply for emergency funding from the Paycheck Protection Program (PPP), just hours before the loan program was set to expire. Under the measure, the U.S. Small Business Administration can continue to approve and offer PPP loans until August 8th to startups and small businesses that have been financially harmed by the coronavirus pandemic.
Engine Hosts Town Hall With Rep. David Schweikert and Arizona Startups
With many small businesses struggling as a result of the COVID-19 outbreak, startups are stepping in to offer free services to help small firms navigate the economic uncertainty. Whether it’s opening up their platforms to keep small businesses engaged with their local communities, or aggregating available resources and federal loan information for struggling firms, startup founders are using their knowledge, experience, and services to support other entrepreneurs in need of assistance.
Startups Changing Their Business Models in Response to COVID-19
As Americans struggle to cope with the COVID-19 pandemic, hundreds of startups all across the country are leveraging their tools, resources, and services to aid medical researchers and businesses in need of immediate assistance. Engine spoke with four entrepreneurs who pivoted their business practices to better support those affected by the ongoing pandemic. This is the first post in a series on startups and entrepreneurs who are responding to the COVID-19 pandemic.
Primer: Access to Capital
Engine Statement on House Passage of Capital Access Bills
Today, the House of Representatives passed a package of bills that will improve the capital access landscape for innovators across the country, including the Micro Offering Safe Harbor Act (H.R.4850) and the Private Placement Improvement Act of 2016 (H.R.4852). With the approval of these two bills, the House has now passed four of Engine’s 2016 legislative priorities related to capital access.
An Opportunity to Fix Crowdfunding Before It Falters
On May 16, 2016, regulation crowdfunding will go into effect, meaning for the first time ever,anyone can invest in a startup through an online platform. This is big. Until Congress passed the JOBS Act in 2012, buying an equity stake in a company required being fairly wealthy or having a pre-existing relationship with the entrepreneurs raising capital. But the Internet has dramatically changed the way entrepreneurs share their ideas and connect with potential investors. With the JOBS Act, the law finally caught up as well – or it almost did.
Engine Statement on House Passage of the HALOS Act
Engine applauds the U.S. House of Representatives’ passage of the Helping Angels Lead Our Startups (HALOS) Act. The bill, which was approved by a wide margin of 325-89, would clarify regulatory ambiguities around general solicitation, making it easier for startups to publicly showcase their ideas without unintentionally running afoul of securities laws.
An Outdated Law Shouldn't Limit Demo Days
The pitch competition has practically become a standard rite of passage for startups, especially early-stage firms seeking investment. Yet, many pitch events may violate decades-old securities law. Congress is now considering legislation to fix this: The HALOS Act. Sponsored by Rep. Steve Chabot (R-OH), this legislation clarifies the rules around pitch competitions, making it easier for startups to pitch their business plans and find potential investors.
Four Years of the JOBS Act: Examining Its Impact and Looking Forward
April 5, 2016 marked the four year anniversary of the enactment of the Jumpstart Our Business Startups (JOBS) Act. While the statute is still relatively young, we have already begun to see the positive impacts that its provisions have had on startups’ ability to raise capital. It has made going public easier and created new pathways for startups to raise money through Regulation A+ and general solicitation under Regulation D. And with regulation crowdfunding set to finally go live in May, we are hopeful that a vibrant non-accredited investor crowdfunding market will emerge in the near future.
The SEC could change the requirements for investing in startups, and that’s not good
As strange as it may seem, only a small percentage of Americans can legally invest in most startups today. Under long-standing rules governing who qualifies as a so-called “accredited investor,” only quite wealthy individuals (those make at least $200,000 in annual income or have $1 million in assets, excluding their home) can buy shares in a fast-growing, privately held company.
JOBS Act Announced. Let's Get to Work.
The Senate is stalling on actions taken by the House to grow job creation, and if they won’t take them up individually, House Majority Leader Eric Cantor (R-VA) hopes the Senate can consider the bills all at once. Cantor today announced House Republicans would bundle a number of entrepreneur-friendly bills focused on aiding startups in gaining better access to markets and capital, easing regulations to allow crowdfunding, and raising thresholds for compliance. Cantor detailed the plan, dubbed the Jumpstarting Our Business Startups (JOBS) Act, in a POLITICO op-ed published earlier today.
The package includes the following bills:
H.R.2940, - Access to Capital for Job Creators Act
Passed in the House, this bill would revise regulation D offerings to relax limitations for qualified investors to sell securities. Currently, regulation D allows some businesses to sell securities without registering them with the SEC. H.R.2940 would make it simpler for startups to raise capital through crowdfunding by removing the regulation D prohibition of general solicitation and general advertising for accredited investors.
H.R.1070, S.1544 - Small Company Capital Formation Act of 2011
This bill would amend the Securities Act of 1933 to exempt from SEC regulation a class of offerings between $5 million and $50 million, with a provision to review and increase this figure biennally. The Securities Act of 1933 capped exemption at $5 million and is long overdue for an update. Increasing the breadth of exemption would make it simpler for startups to raise capital and still be in compliance with SEC regulations.
H.R.1965, S.556, S.1941- To amend the securities laws to establish certain thresholds for shareholder registration, and for other purposes.
This bill would amend the Securities Exchange Act of 1934 to increase the threshold from $1 million to $10 million for shareholder registration for an issuer of securities. As with the Small Company Capital Formation Act of 2011, this would ease regulations and make it simpler for startups to gain access to capital and still be in compliance with the SEC.
These bills are no-brainers, and what’s more, many of these provisions appear in the President’s Startup America legislative agenda, released in late January. In our view, what’s good for startups is good for job creation and the overall economy. Now let’s get them through the Senate.
What else should legislators consider this year? Tell us over at Step2 and help define the Innovation Agenda.